7) Your mother asks you to review her mutual fund performance in her RRSP. You find that the fund holdings had a beta of about 1 and an active share near 0 relative to the TMX60 index. The fund reported a total return last year of 8.25% as compared to the TMX60 benchmark that earned 8%. The fund fees included front-end of 1%, a MER of 2% on end of period invested capital as well as 10% on anything above 5% total return. What was your moms performance after fees closest to?

A) 4.12% B) 4.68% C) 4.925% D) 5.25% E) 6.25%

8) Use the information in Question 7 to answer this question. Which argument should you make to your mom if you wish to help her maximize her fund performance?

A) Mom youre essentially holding an ETF of TMX60 as your beta is about the same and your fund active share is very low but you have fees that are too high, I think you should hold the ETF instead

B) Mom, your manager is beating the market but by too little a margin relative to his/her MER. You should negotiate with the manager and ask them to reduce their fee structure in line to their performance above the benchmark.

C) Mom, you should never pay front-load fees. Sell these funds immediately before you incur any costs to the capital you have for investment.

D) Mom, your beta is too low at 1, you should look for funds with betas of at least 2 on average so to maximize your performance.

E) Mom, your manager is too active and likely inducing excessive churn in your portfolio. You should contact the manager and insist that they reduce their active share to below zero.